tv Nightly Business Report PBS September 7, 2010 12:30am-1:00am EDT
began, figuring out when businesses will started hiring is anyone's guess. until we get serious about bringing that number down, we're addressing it. this is a long term problem for the economy. >> tom: from the state of the labor market to tips to help you land a job, you're watching "help wanted," a "nightly business report" special edition for labor day, monday, september 6. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by: this program is made possible by contributions to your pbs
station from viewers like you. thank you. >> susie: good evening, everyone, and thanks for joining us for this labor day special edition. the jobs picture just keeps getting worse. tom, back in january, the economy was adding jobs and the recovery was gaining momentum. then europe's debt woes exploded and the global recovery came to a grinding halt. >> tom: susie, the latest employment numbers aren't much help. 54,000 jobs disappeared from u.s. payrolls in august, and the unemployment rate hit 9.6 >> susie: so how bad is the employment picture, and how long will it take to get back to where we were before the recession started? suzanne pratt puts it in perspective. >> reporter: it seems lately that signs like these are extremely hard to come by.
even though the great recession may technically be over, the labor market is far from recovered. the nation's unemployment rate hit 10% late last year and has hovered just below there ever since. but economist dan greenhaus says that widely quoted number understates the magnitude of the job crisis and the inequalities within it. >> if you're an advanced degree white guy working not in construction, you're fine. it's like 4.5%. it's what's going on underneath there that really speaks to how people are viewing the recession and the labor market difficulties, and why some people think it's not that bad or it's not as bad as the '80s, and other people think this is the apocalypse. >> reporter: here's just a sampling of what's going on underneath the headline number: the unemployment rate for teens stands at more than 25%; for construction workers it's about 17, while, for government workers, it's less than 6%. and perhaps most troubling is
that the broadest measure of unemployment and underemployment is a hefty 16.5%. that includes people who want jobs but have stopped looking and those working part-time but want full-time. >> until we get serious about bringing that number down or addressing the imbalances, this is a long-term problem for the economy. >> reporter: just how long term a problem are we talking about? an expanding chorus of economists says anemic job growth suggests the unemployment rate will remain stubbornly high until 2011, 2012 or even longer. that would mean the labor market hasn't been this strained since the great depression of the 1930s and, before that, the financial panic of the 1890s, sparked by concerns about the gold standard and failures in the railroad industry. n.y.u. professor richard sylla says history shows it's much harder for the economy to bounce back from a financial crisis
than a garden variety recession. >> the unemployment tends to stay high for a longer period of time, and that's because people don't get back into spending because the financial crisis may have resulted from people them being in too much debt. so when it happens, they de- leverage for a while, and the economy doesn't really have enough demand to get those unemployed workers back to work quickly. >> reporter: professor sylla points out it took a world war to get americans fully employed again in the 1940s. we may not need a war to repair today's labor market, but economists worry the political stalemate in washington will result in few new policy measures to help create jobs. suzanne pratt, "nightly business report," new york. >> susie: as suzanne mentioned, some economists think unemployment could stay stubbornly high for another two years or so.
to get a better picture on the labor market and what can be done to fix it, i spoke with economics professor ken rogoff of harvard university and anthony chan, chief economist at j.p. morgan's private banking. i began by asking anthony chan, how long will it take for the job market to recover? >> i think it's going to take quite a while. the real secret to bring the employment rate down is to grow the economy faster than the speed limit, and the speed limit is to find the potential growth. and if you believe potential growth is in the neighborhood of 2.5 to 3%, and the economy is growing below that, we won't make much progress until next year when we see the economy growing in the neighborhood of 2.5 to 3%. even that is questionable when we're just coming off a calendar quarter of 1 .6.
>> when do you think the economy will recover, and the reaction to what anthony is saying about potential growth? >> i think he's spot on. i think we're looking at sort of at best, normal or a bit of above normal growth, but that just covers the new entrance to the labor force. normally after a recession, and you go down like we did, you go up really fast, and people pick up jobs. not happening. i think it's going to take many years. we have a credit to absorb, and there are major transformation across the economy in drnts sectors that are just going to take time. >> what are the options available as to whether the government or the federal reserve to stimulate growth? anthony, you first. >> i think there are options. the problem with the options are that they are losing some potency. the federal reserve outlined some possibilities of more quantitative easing on the fiscal policy front.
more fiscal stimulus. the problem, however, is that monetary policy still hasn't gotten the job done, and neerpgtd has fiscal policy. the hope is we make progress, and if the past is any indication whaf we can expect in the future, we would at least have to expect that the potency of future policy is quite limited at this point. >> certainly, we've heard from fed chairman bernanke have the options available. but we know we're coming into the mid-term elections, and there's not much appetite in congress for new spending plans or big bold job creation plans. what do you see as options available to pick up job hiring? >> well, there's certainly a gridlock in congress. and i think the job situation for the november election is baked in the cake at this point, and has you thinking, what's going to happen after this? what's going to happen in the next couple of years. >> i don't think there's much that can be done with fiscal
policy, although they can invest in infrastructure projects. they can transfer money to state and local governments that can't borrow. they can extend unemployment insurance. i'm afraid the fed is going to end up carrying a lot more of the weight than they wish they would. they wish they wouldn't have to, but i think as anthony said, they're going to end up intervening in credit markets and making more loans than they'd like to and probably, i think, end up with a much more aggressive interest rate policy, even trying to raise inflation at some point. bernanke outlined it. some missed it, but i bet he's going to be coming back to it next year. >> let's look ahead to next year at this time. where do you see the unemployment rate on labor day 2011? anthony? >> well, i actually -- i'm somewhat optimistic, even though i would say cautiously optimistic. i think the unemployment rate will be heading towards 10% in the not too distant future,
and then by next labor day, i think if economic growth picks up slightly above the potential growth barrier, we may see the unemployment rate come down to 9.3 to 9.5%. >> ken, where do you see the unemployment rate in 2011? >> well, not over 9%. we had 4% when this started. that's grim, and i'm afraid it's realistic. i don't think we're going to be much better than that. i think we'll come down maybe a half, three quarters of a percent a year and gradually inch down, and land at 6.5 or 7%. >> you said it's a long road to roefsh. thank you so much for coming on the program. i hope you have a great holiday weekend. >> thank you, same to you. >> in my trade, which is the construction industry, it's
still off easy 60%, 70%. the thing that is are out there to do, there's just no money to be made in it. you're working basically for nothing right now. >> businesses were >> tom: businesses were hit hard by the recession, with many waiting for the economy to pick up before adding to payrolls. the problem has been especially tough for small companies, which employ half of all american workers. erika miller introduces us to two business owners with different reasons for holding back on hiring. >> reporter: jewelry designer bonnie riconda say she's one of the fortunate small business owners. sales at her company, calico juno designs, have not gotten hammered in the midst of a weak economy. she works out of a studio in the back of her store on city island in the bronx. >> in terms of sales, we are remaining steady, which is really, really good-- especially in a business where it's not a necessity. >> reporter: riconda says she often needs extra help but is hesitant to boost payrolls until sales pick up. on the other hand, she recognizes it will take time to
find the right worker and weeks to train the person to make her 850 designs, which is why she is considering hiring someone as soon as this fall. >> i would like to be able to hire somebody for right before christmas and get the store stocked up, because we do get busy last year right before christmas. >> reporter: lack of demand isn't the only problem small businesses are facing. even firms with strong sales are holding off hiring for other reasons. >> any city that has a traffic light, we have service in it. >> reporter: alex mashinsky is the c.e.o. of groundlink, a company that arranges ground transportation between any two points worldwide. revenues are up 40% in the past year, but he's not hiring. instead the firm has been laying off workers, as you can see from the empty seats at the company's midtown manhattan call center. mashinsky says it makes better sense to invest in technology than people. >> currently, close to 40% of our transactions are done on the web, and it's because we put
more and more functionality on the web. and now there are things on the web that you can't get on the phone. >> reporter: there are still other reasons some businesses are reluctant to add employees. many firms think carefully as they approach the 50-worker threshold because they will be required to offer health insurance in 2014. but experts say, above all else, it's register receipts that drive hiring decisions. sageworks c.e.o. brian hamilton expects small businesses will start hiring in the months ahead as the recovery picks up momentum. >> once people start to tune into that and say "the sky's not going to fall," then people will buy more. sales will go up, and i think employment will get better. but it will take time. >> reporter: hiring by small business can have a big impact on the economy. over the past 15 years, the majority of new jobs have been created by businesses with fewer than 500 employees. erika miller, "nightly business report," city island, new york.
>> tom: companies are sitting on billions of dollars in cash, but they're reluctant to spent it on creating new jobs. what will it take to get american businesses hiring again? leo hindery has made those decisions. he's the former c.e.o. of a.t.&.t. broadband, t.c.i. cable, and he's chairman of the u.s. economy smart globalization initiative at the new america foundation. >> it's nice to be here, tom. happy labor day. >> you too. what needs to change in the current environment to encourage hiring? >> it's surprisingly simple. it's not going to be easy to attain, but it's surprisingly simple to understand the uncertainties. the actual number is about $2 trillion of cash accumulated on the balance sheets of america's corporations, and they look out as the american
consumer does over the next year to two years and say there's not enough certainty out there for me to spend that kind of resource. >> let's talk about the size of this problem. as you mention, the economy is technically in a growth mode, but since january, 2008 we've lost jobs. and in the last recession of 2003 it was under 3 million jobs that were lost. so clearly the crater is much larger. what do the ceos need to do to increase the payrolls in a meaningful way? you mentioned certainly, but certainty in what? in policy, in business strategy? >> we have real unemployment, tom, that approaches 20%. it's not the official 10%. we've got 30 million women and men that are effectively unemployed, not 15 million. so you're going to have to see from the public side, policies. this can't be done only from the private side. as i've commented, they're too
uncertain. >> you've come up with four initiatives that you'd like to see to jump start hiring. let's go through a couple of them. you'd like to see mandates when it comes to domestic infrastructure projects but doesn't that go against the globalization that the rest of the world has been experiencing? >> it would, tom, if it wasn't reciprocal. 20 nations comprise the g-20. 20 nations met in torontosa the g-20. 19 of them have specific procurement by government programs. one nation does not. it's our own. we're not reaching into the stratosphere for something that others don't do every day. it's the absence of reciprocity and the absence of balance that concerns us. >> the two others you'd like to see are more programs for unemployed youth, and balancing the economy. this gets to manufacturing. how do you do that in a
services and intellectual patented type of economy and information economy we developed? >> start with the youth. there's 5 million young men and women in the category of out of school unemployed. these are the easiest of workers to re-employ. we have models dating back to the f.d.r. administration continuing through eisenhower, kennedy. there are very able programs to put out of school youth to work, and yet the number of these young people that's in that category, tom, is quite extraordinary. it's about 5 million. >> what about the rebalancing of the economy? >> the rebalancing is also perative. >> we have 11% of employees making something, and we're a nation of 310 million people. if we don't have at least 20% of american workers making something, you put such a burden on the services side
that you can never be in balance. you say how do you do that having fallen so precipitously from the 20 or 30% level? you have to stop trade cheating. american manufacturers can compete with anybody in the world, i believe, if the competition is a fair one, and i write extensive and speak extensively about what i think is trade cheating by china and others in asia. >> tom: leo, we appreciate those ideas and we'll see how they play out. our guest leo hindery was the ceo on the t.c.i. cable, and currently with the smort globalization initiative at the new american foundation. >> we have the car payment and a house, and we live modest. we can't afford the bills we
could before. and things just keep going up. >> susie: with so many americans out of work for so long, finding a job isn't easy. some people have given up and are no longer counted on the unemployment rolls. if you're looking and having a tough time, maybe something's missing from your resume. jamila trindle gets some tips from employment pros and introduces us to a group helping people get back to work. >> my claim to fame is that i was a fortune 100 director of engineering in silicon valley. >> reporter: now mayumi okada is a full-time job seeker in the washington, d.c., area. >> first i tried the big companies, then i tried the small companies. i've tried... focused really hard on certain jobs. i've gone to "jeez, i'll take anything." >> reporter: about nine months in, she opened up the search to other parts of the country but still couldn't find a position. >> and the hard part is, i did hit a year. and when you hit your year anniversary, it's kind of like, "okay, this is really getting old now." >> reporter: okada keeps herself going with detailed lists of what she needs to do and what she's already accomplished. she says, otherwise, time can get away from her.
>> i will have a busy day and really haven't done anything important. >> reporter: she also finds support at this weekly meeting of job seekers at a local church where people can network, get help with resumes and celebrate the occasional success. ( cheers ) mayumi also volunteers, offering advice that she has gleaned from her own year and a half on the job market. >> probably every three or four months, i have to actually look at, "is what i'm doing working?" >> reporter: once you've been out of work for a couple months, it can become harder and harder to put yourself out there, easier to just apply to things online and rely on e-mail. but job counselors say it's important to keep getting out, beat the streets, go to networking events, meet with people in your field and build your network in person as well as online. >> they need to make friends. this idea of trying to make contacts and just e-mailing them every week, it usually doesn't work because they're thousands of people doing that.
>> reporter: ellie wegener has been counseling people through unemployment and career changes for 25 years. the internet is an important tool, but she says most people still get a job through a personal or professional contact. >> you can stay with your internet all day. it will never insult you, it will be your friend, but you may not get a job that way either because you've got to make those contacts. >> reporter: wegener also helps set up community support groups like this one, where the unemployed can find advice and support and know that they're not alone. >> one in ten people is job hunting. it's quite a popular thing. it's "in" right now. you don't have to feel ashamed or inadequate. >> reporter: and other job hunters can sometimes offer the best encouragement. >> i'm out here on my own. i have one carload of stuff and two dogs. i rented rooms for a while, and now a friend has let me use their spare room so i can still stay out here. so if they hear that, sometimes they feel like "okay, my position isn't as bad as yours,
so..." ( laughter ) >> reporter: giving up isn't an option, says okada, and she won't let her colleagues in the job search business give up either. jamila trindle, vienna, virginia. >> tom: finally tonight, if you can't get hired in your career field, maybe it's time to change focus. diane eastabrook brings us the story of a former chief financial officer who found a new life by returning to his roots. >> you are now at fenwick high school. you are friars. >> reporter: this assembly on the first day of class at fenwick high school in oak park, illinois, marks a new beginning for 300 freshmen. it is also a beginning for greg pritz, the school's new finance director. he joined the staff last may after being jobless for 18 months. for pritz, this job is a poignant return to the past. he graduated from the catholic high school 35 years ago.
>> did you ever think you'd be back at fenwick working here? >> only in my nightmares. ( laughter ) >> reporter: we met pritz in last year's labor day special. the former chief financial officer talked with other laid- off professionals about losing work and trying to finding it again. at that point, pritz had been jobless for nine months. >> the hard part is keeping the energy up. >> reporter: as we walk the halls of his alma mater-- now employer-- pritz talks about how the loss of his high-level corporate post made him reevaluate his life and career path. >> i like the fact that i'm working for a mission. i like the fact that there is a greater good to what we all do here. >> reporter: still, there's a downside to working for a non- profit. pritz's new salary is a fraction of his old one. >> initially, the numbers are a little shocking, but, you know, as you get closer to the mission and you work toward educating these great kids and giving them
a chance at having a great life, it kind of melts away. >> reporter: when fenwick high posted the finance director job last march, the school got more than 300 applications, and even though pritz had been out of work for several months, the school said that he was a standout because of his vast professional experience and his association with the school. fenwich high president father deporres durham says they needed a finance director who could balance the monetary interests with the school's overall mission. >> the corporate world is driven legitimately by profits for shareholders; we're driven by effectiveness of a mission. and so i think it's also important that he brings a sense of understanding that the bottom line is the success of our students, the opportunity that we create for them. >> reporter: pritz sees high school as a reflection of life-- it's where lessons are learned. he says being without a job taught him about humility and gratitude. and this fenwick friar thinks he's here to stay, even if the
corporate world heats up again. >> i think it's permanent. i got to tell you, coming back here is like coming home. >> reporter: diane eastabrook, "nightly business report," oak park, illinois. >> tom: that's "nightly business report" for labor day, monday, september 6. i'm tom hudson. good night, everyone, and good night to you, too, susie. >> susie: good night, tom. i'm susie gharib. good night, everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: